Kenneth Rijock

Sunday, January 22, 2017

It is clear, from any objective review of the District Judge's latest order, in the Zarrab case, that the Court has a real problem with the fact that HSBC made a huge profit, by intentionally evading Iran sanctions, and running a lucrative program that had written policies, which ensured no US bank would tumble to the truth.

The Court even quoted from the Motion to Dismiss,
" Even where a bank is deceived, a jury cannot infer the defendant [HSBC] attempted to victimize the bank [because] the actual exposure of [the] bank, to losses, is unclear, remote or non-existent " Another quote, " ... if the scheme works, the bank is better off."

The Court also quoted from the Statement of Facts, in the HSBC Deferred Prosecution Agreement, about the 'repaid queue," where the bank actually placed cautionary notes in SWIFT messages, including " DO NOT mention our name in NY [emphasis supplied]," and "DO NOT mention Iran [emphasis supplied]," so that American banks would not be tipped off. the fact that the Court cited these statements should not be underestimated.

There remains a strong feeling, in the US compliance community, that HSBC received a pass on a criminal indictment that should have been filed. One widely distributed compliance article asked "Why is this bank still in business?" Should HSBC USA have been subject to harsh sanctions ? That question remains unanswered.

If the prosecution of Reza Zarrab, allegedly the most prolific Iran sanctions violator, in the history of the sanctions, is harmed in any way, perhaps the new Attorney General should revisit the HSBC case, and the bank's reportedly incomplete and insufficient progress in its reform program.